Starting Your Forex Hedge Fund

You want to quit you day job, and what you’ve heard about Forex hedge funds sounds almost too good to be true.  Doing minute-by-minute trading and making a profit- from the comfort of your laptop- and doing it legally.  While it’s certainly not nearly that simple, there are many that go into Forex hedge funds and make a healthy income.  If you’re seriously considering starting a Forex hedge fund, here are some points to be aware of:

  • Hire a legal advisor that specializes in Forex hedge funds.  You’re going to need expert advice on which documents are needed, how the tax system works for Forex hedge funds and the specific regulations.  Trying to wade through the morass of legalese can not only be extremely confusing, but if you get your information wrong you’ll still be liable legally.
  • Make allowances for the time-frame of set up.   You might see a lot of advertisements that say you can open and start trading your Forex hedge fund in just an hour or two, but when you want to be both professional and above-board plan on anywhere from 2 weeks to 4 weeks for the entire set up.  Forex hedge funds are a long-term venture, not a short-term scheme.
  • Register with the CFTC and the NFA, if necessary.  Depending on what you and your legal advisor decide on, you may need to officially register.  You might need both the CFTC (Commodity Futures Trading Commission) and the NFA (National Futures Association). You might be exempt from having to register- it will depend on which type of Forex hedge fund trading you want to go into.
  • Register as a CPO, if necessary.  Becoming a CPO (Commodity Pool Operator) is needed if you officially register.  It also lands credence to your ‘reputation’ as a Forex hedge fund trader, and could help you garner more clientèle.  Again, this is dependent only upon which type of trading you want to do.

A few other things to keep in mind:  Forex hedge fund trading involves patience and time.  You can quit your day job, and work for the 1-2% AUM (Assets Under Management) with an average of a 20% fees from the net gains annually.  But that usually comes with time and effort.  Another tip:  when you’re starting out, find your initial clients in your private circle.  They could be family or colleagues, and you’ll have more confidence in starting out.  You can do Forex hedge fund trading full-time- as long as you’re willing to go through the necessary steps.

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